The fact that statements ghostwritten for lawmakers by drug company lobbyists were not aimed at changing the contents of the House health care bill should provide no comfort to the public.

The pharmaceutical industry had already gotten the additional protections it wanted for biologic drugs added to the legislation months before the vote. It grants brand-name biologics a 12-year marketing monopoly, more than double what conventional drugs receive, even though the industry’s own numbers show that they cost about the same to develop.

Even worse, the bill also includes a loophole that would allow companies to make minor modifications to the drugs just before the protection period ends and receive a new monopoly. This could block price-lowering generic competition indefinitely.

The Obama administration, a bipartisan group in Congress, the Federal Trade Commission and most consumer groups opposed extended monopolies for biologics. This raises the question of why they are in the bill. Could it have to do with the more than $110 million pharmaceutical companies spent lobbying Congress so far this year?

Sarah Rimmington
Washington, Nov. 18, 2009

The writer is an attorney with the Access to Medicines Project of Essential Action.

During this week’s Meeting of the South American Union of Nations (UNASUR) in Guayaquil and Quito Ecudaor, UNASUR Health Ministers announced their strong support for Ecuador’s new policy of licensing patents to improve access to medicines.

Speaking for the delegates, Peruvian Health Minister Oscar Ugarte Ubillús said Ecuador’s decision is an “exercise of sovereignty, a positive act, in accordance with international rules, for which the UNASUR ministers and officers of Health offer our support.” Ministers from Argentina, Paraguay, Bolivia, Brazil, Venezuela and Chile each spoke in turn in support of Ecuador’s policy.

The ministers also discussed the advantages of block negotiating for better AH1N1 vaccine access.

So far the news stories on this subject are all in Spanish. Stories from Voice of America and El Nuevo Empresario (Guayaquil) are available below.
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Under the TRIPS agreement member Nations can force compulsory patent licenses at their discretion. The 2001 Doha declaration clarifies this point: “Each member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted.”pic-76.jpg

In October 2009, Ecuador’s president issued a decree that allows its Ministry of Public Health to issue compulsory licenses based on public interests such as access and costs. According to IP Watch, the government is now “working on a mechanism for issuing those licenses” on a case-by-case basis. [Link]

Spinning this decision, Access-to-Medicines advocate Peter Maybarduk indicated that the US is the world leader in compulsory licensing:

“Many countries have used compulsory licenses to promote public interests and remedy anti-competitive practices in a variety of sectors. Today, the United States is perhaps the most frequent user of compulsory licensing; including the government use of defense technologies, and judicially-issued licenses to remedy anti-competitive practices in information technology and biotechnology, among others. Canada routinely issued compulsory licenses during the 1960s and 70s to develop its national pharmaceutical industry. In recent years, a number of countries have issued compulsory licenses to improve access to medicines, including Thailand, Malaysia, Eritrea, Mozambique and Indonesia, among others.

In 2007, Brazil issued a compulsory license for the HIV/AIDS medicine efavirenz. Brazil has provided treatment to hundreds of thousands of people living with HIV/AIDS and saved well over US$1 billion through its combined medicines strategy of domestic production, importation, negotiation and compulsory licensing.”

Major pharmaceutical companies have reportedly agreed to work with the government in collecting royalty payments. The same report indicates that Ecuador plans to obtain drugs both through local manufacture and imports. Prior to TRIPS, more than four-dozen countries categorically refused to grant patent rights on pharmaceuticals.

Since Ecuadorean President Rafael Correa signed a decree on 23 October allowing compulsory licences, the national intellectual property office has been working on a mechanism for issuing those licences, which should be studied case by case, according to the national decree.

Referring to Article 31 of the World Trade Organization (WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, the Ecuadorean constitution, and the WTO Doha Declaration on TRIPS and Public Health, Correa declared access to essential medicines of public interest to the Ecuadorean population.

Ecuador’s intellectual property office is currently working on legislation for issuing compulsory licences that will be TRIPS-consistent and will respect all of Ecuador’s obligations as a member of the WTO, an Ecuadorean official in Geneva told Intellectual Property Watch.

Article 31 of the TRIPS agreement allows member countries to use patents without the authorisation of the right holders in certain cases such as a national emergency, extreme urgency or for public non-commercial use, although the right holders should be informed in the case of public non-commercial use.

The Doha TRIPS and Public Health Declaration states that TRIPS “does not and should not prevent members from taking measures to protect public health.” The declaration reinforce the right of countries to use the TRIPS flexibilities, including compulsory licensing, and it was agreed that least-developed countries’ exemption on pharmaceutical patent protection would be extended until 2016.

In the past some developing countries using the TRIPS flexibilities have faced strong opposition from the developed country pharmaceutical industry challenging on several occasions the legitimacy of compulsory licences.

The Ecuadorean Institute of Intellectual Property (IEPI) (Instituto Ecuatoriano de la Propiedad Intelectual) will have competency to issue compulsory licences to applicants, based on the legislation, according to the decree, numbered 118. The IEPI will work in coordination with the Ministry of Public Health. The scope, purpose and timeframe of compulsory licences, as well as the amount and conditions of royalty payments will be established by the IEPI, the decree said.

In Ecuador, the average price of a medicine if competition exists is about US$ 3.85, according to the IEPI, but if there is no competition, the average price is $46, not including cancer and AIDS medicine, which are more expensive.

According to an IEPI administrative guide presenting a scenario for the issuance of compulsory licences, in 2002, an Ecuadorean national laboratory asked for a compulsory licence for an anti-retroviral drug (Convivir from GSK), which was usually priced $350 for a month of treatment. Just by asking for a compulsory licence, GSK dropped its prices to $60 a month and the compulsory licence was not issued, it said.

Other countries have sought to issue compulsory licences, according to the guide. For example, Brazil in 2007 issued a compulsory licence for an AIDS treatment. Malaysia also issued a compulsory licence for “government use” for three medicines to treat HIV/AIDS, and started to import generic medicines from India. In Brazil, the costs dropped by 81 percent for patients with HIV/AIDS.

According to this guide, which was drafted as a basis for discussion, between 0.5 and 10 percent of the sale of the generic medicines could be paid as economic compensation to patent holders.

As has been the case in other countries, the decision to issue compulsory licences could prompt pharmaceutical companies to reconsider their prices, the Ecuadorean official told Intellectual Property Watch. But for the moment, nothing has happened, he said, and no companies have come forward.

Compulsory licences also could be issued under the WTO decision of 30 August 2003 on the implementation of paragraph 6 of the Doha Declaration on TRIPS and Public Health, according to the guide.

This WTO decision, which was approved as a permanent amendment to the TRIPS agreement in December 2005 and is awaiting full ratification, allows members who produce pharmaceutical products under compulsory licences to ship a majority of it to developing countries lacking production capacity. Before this, TRIPS said that drugs produced under compulsory licences had to be for “predominately” domestic use.

Some of the medicines under compulsory licences will be manufactured by the Ecuador national manufacturing industry, while others will be imported from other countries, according to the Ecuadorean official.
Catherine Saez may be reached at [email protected]

Following are comments from representatives of consumer, health and medical student groups, following the wholesale addition of the brand-name industry backed Eshoo-Barton-Inslee approach to generic biologic drugs by House Republican party leadership in their health care amendment, “The Affordable Health Care for America Act,” released today:

“It’s disappointing that the Republican Party which purports to be the party of free markets has decided to lend its support to a pro-monopoly, anti-competition, anti-innovation biogenerics proposal.” Robert Weissman, President, Public Citizen, (202) 588-1000, [email protected]

“Today, it is unfortunately apparent that across party lines, special interest politics rather than evidence-based policies have prevailed. The democrats’ provisions on lifesaving biologic medicines—accepted verbatim by the Republicans today– contradicts the major objectives of health reform—to contain health care costs and expand access to health care.” Laura Musselwhite, medical student, Duke University, and member of www.AffordableMedsNow.org campaign of the American Medical Student Association (AMSA) and Universities Allied for Essential Medicines (UAEM), 336-908-6635, [email protected]

“It looks like the only thing the Democrats and Republicans agree on relating to health care reform is the adoption of a generic biologic drugs proposal that will perversely block price-lowering generic competition. Unfortunately, this kind of bipartisanship will keep affordable versions of drugs like Roche-Genentech’s $48,000 per year blockbuster cancer treatment Herceptin out of American patients’ hands for far too long, or perhaps forever.” Sarah Rimmington, Attorney, Essential Action, Access to Medicines Project, (202) 422-2687, [email protected] Essential Action is a member of the www.AffordableMedsNow.org campaign.

“Perhaps we’d have greater bipartisan attention paid to access to affordable medicines for patients if the American people could afford to match the $1 million a day Pharma is spending on lobbying Congress. Members of Congress need to look at the evidence and fix the flawed provisions supported by Representative Eshoo and others to allow a true pathway for generic biologics.” Ethan Guillen, Executive Director, Universities Allied for Essential Medicines, (775) 287-2553, [email protected] UAEM is a member of the www.AffordableMedsNow.org campaign.

“These days Washington, DC is a one party town, when it comes to influence from big Pharma. The Republicans had a chance to demonstrate that competition can protect consumers and businesses. Instead they opted for highly regulatory barriers to competition.” James Love, director, Knowledge Ecology International (KEI) (202) 361-3040, [email protected] KEI is a member of the www.AffordableMedsNow.org campaign.

“At a time when we are hoping to reform health care by bringing costs down and improving patients’ access to treatment and care, I am disappointed to see GOP leaders adopt Rep. Eshoo’s language for biologic drugs. This language will in effect extend pharmaceutical companies’ high monopoly pricing via prolonged periods of market exclusivity, and paradoxically stifle innovation by enabling easy renewal of these long monopolies.” Saira Alimohamed, student, Alpert Medical School of Brown University, and Chair of the Global Health Committee, American Medical Student Association (AMSA). (443) 803-7403 or [email protected] or [email protected] AMSA is a member of the www.AffordableMedsNow.org campaign.

“I am shocked at the ability of the pharmaceutical industry to buy what it wants from Congress. The inclusion of a biogenerics proposal that will in fact block most generic biologic drugs from coming to market in the Republican healthcare bill underscores how policy-making in Washington these days is less about patient’s needs, and more about serving the interests of the pharmaceutical industry.” Malini Aisola, Senior Research Advisor, Knowledge Ecology International, (202) 332-2670, [email protected] KEI is a member of the www.AffordableMedsNow.org campaign.

“These most recent developments in health care ‘reform’ are extremely troubling. I am very worried for the future of America’s healthcare system if the only productive compromise our representatives can make is to throw in this same biogenerics proposal, with its same lack of foresight or concern for patients’ rights.” Eric Emilio-Gerrit Butter, student, UNC Gillings School of Global Public Health, Duke Institute for Genome Science and Policy, and member of Universities Allied for Essential Medicines (UAEM), (607) 759-5959, [email protected] UAEM is a member of the www.AffordableMedsNow.org campaign.

On October 26, Ecuadorean President Rafael Correa announced a bold new national access to medicines policy through decree no. 118, declaring access to priority medicines a matter of public interest, and establishing procedures for issuing compulsory licenses. Such licenses would authorize price-lowering competition with expensive patented drugs.

Many news articles, in Spanish, English and French, reported on the decree, as well as on subsequent comments and analyses by the patent office, national and international pharmaceutical companies, and observers. Unfortunately, several inaccuracies circled the globe through some of these reports. Essential Action has produced a fact sheet to correct a few of the most commonly repeated inaccuracies.

In October 2009, Ecuador’s President Rafael Correa announced a bold new national access to medicines policy through decree no. 118[1], declaring access to medicines for priority public health needs a matter of public interest, and establishing procedures[2] for issuing compulsory licenses. Such licenses would authorize price-lowering competition with expensive patented drugs.

Many news articles, in Spanish, English and French, reported on the decree, as well as on subsequent comments and analyses by the patent office, national and international pharmaceutical companies, and observers. Unfortunately, several inaccuracies circled the globe through some of these reports.

1. Compulsory licenses do not eliminate or break patents.
Compulsory licenses authorize use of a patented technology. Under compulsory licenses, patent holders retain their patents and a variety of related rights, including the right to be adequately compensated through royalty payments and any rights reserved through restrictions set out in the license. For example, sometimes compulsory licenses are limited to public, non-commercial use (also called “government use”). In these cases the patent holder retains exclusive rights in the private market (i.e., the right to be the exclusive seller to private pharmacies and insurers). Ecuador will issue compulsory licenses, which is qualitatively different from annulling patents.
2. Ecuador has not predetermined the number of licenses it intends to issue, nor will it license all medicines en masse. According to the Declaration, Ecuador’s patent office (IEPI) will consider compulsory license requests on a case-by-case basis. IEPI will consult with the Ministry of Public Health and take into account the public interest that licensing a particular medicine would serve. Some news articles reported Ecuador would “license 2,214 medicines” or “eliminate over 2,000 medical patents.” 2,214 is actually the total number of granted and/or requested patents for pharmaceuticals in Ecuador. Often, multiple patents apply to a single medicine. Because there are not 2,214 patented drugs, it is not technically possible for Ecuador to issue compulsory licenses for 2,214 medicines. IEPI will proceed more methodically and deliberately than reported, considering license requests for priority medicines case-by-case.
3. Ecuador’s patent office has not predetermined the royalty rates it will require licensees to pay patent holders.
IEPI will instead determine royalties according to the unique circumstances of each case. IEPI is currently studying international best practices in setting royalty rates, including models and equations used in other countries. Royalty rates established by IEPI are therefore likely to correspond to international precedent.

4. Ecuador has not announced whether licenses would be issued for public use, but if so, Ecuador would not be required to negotiate first.
Some reports have suggested the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) requires Ecuador to negotiate with pharmaceutical companies before issuing compulsory licenses, because Ecuador has not declared a public health emergency.

To remedy confusion about these points, the member countries of the WTO adopted the Doha Declaration on the TRIPS Agreement and Public Health. It specifically states:

“Each member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.” (Paragraph 5(b))

There is no requirement for a country to declare an emergency before issuing a compulsory license. Under WTO rules, countries are free to issue licenses to serve the public interest, as announced in Ecuador’s declaration. TRIPS says only that certain otherwise-required procedures can be bypassed in emergencies and other situations.iii For example, licenses issued for public, non-commercial use are exempt from the general requirement that negotiations must take place prior to their issuance (TRIPS Article 31(b).) The United States, among other nations, makes use of this flexibility and does not require prior negotiations in cases of licenses issued for government use.iv

Ecuador has not announced whether compulsory licenses would be issued for public use, but if so, Ecuador would not be required to negotiate first. In cases where negotiation is required, the government need only offer reasonable terms and conditions. If the patent holder fails to reply, or refuses reasonable conditions, the government can then proceed to issue a compulsory license. In other words, pharmaceutical companies cannot hold up the government for whatever royalty rates they want. In that case the license would no longer be compulsory at all, but voluntary, and the WTO rules would cease to make sense.

[1] The declaration is available online, in Spanish, at http://www.sigob.gov.ec/decretos/. An unofficial English
translation is available at http://www.essentialaction.org/access/index.php?/archives/227-Ecuador-issues-
Presidential-Declaration-on-Access-to-Priority-Medicines.html

[3] For more information on these and other common misunderstandings about compulsory licensing, TRIPS and
the Doha Declaration, please see the World Trade Organization document “TRIPS and Health: Frequently
asked questions compulsory licensing of pharmaceuticals and TRIPS,” available at
http://www.wto.org/english/tratop_e/TRIPs_e/public_health_faq_e.htm

[4] For more information about compulsory licensing practices in the United States and other countries, see James
Packard Love, KEI Research Note 2007:2 “Recent examples of the use of compulsory licenses on patents,”
Knowledge Ecology International, revised 6 May 2007 at http://keionline.org/content/view/41/1.

This diary rebuts the Huffington Post article by Rep. Eshoo, in which she defends her biologics amendment which allows pharmaceutical companies to have 12 years’ exclusivity, which would bar generic biologics [or follow-on biologics FOBs] from entering the marketplace.

Biotechnology products cost billions of dollars to develop, test and bring to market, and in order to ensure that competitors aren’t immediately allowed to free-ride on the costly safety and efficacy data produced by innovators, some period of ‘data exclusivity’ is necessary to allow some period of time to recoup the investment in developing the drug. Without such a ‘data exclusivity’ period, there would be no reason to invest in new biologics. We would see the flow of research funds going to traditional pharmaceuticals, medical devices, semiconductors, green technology or other more promising innovations.

The House and Senate health care bills include a data exclusivity period of 12 years, which is the same amount of time that all drugs enjoy on the market under patent protection, which prevents any competition. I believe the 12-year data exclusivity period preserves the existing incentives for investment in these life-saving products.

She claims that the 12 years’ exclusivity for PhRMA is needed because it encourages these pharmaceutical companies to keep investing billions of dollars in these drugs through innovation. However, the Federal Trade Commission has said otherwise about that claim for the need of exclusivity for twelve years, as seen here below:

Pioneer biologic manufacturers nevertheless have suggested that Congress institute a period of 12 to 14 years of branded exclusivity that would begin once a pioneer biologic was approved by the FDA. During this period, the FDA would be prohibited from approving an FOB product that would compete with the pioneer biologic drug. This branded exclusivity would be in addition to, and would run concurrent with, a biologic drug’s existing patent protection. The economic model put forth by pioneer drug manufacturers to justify this period is based on the average time required to recoup the investment to develop and commercialize atypical biologic drug (referred to as the “Nature model”).

Congress has implemented exclusivity provisions in the past to encourage the development of new and innovative drug products when the drug molecule is in the public domain, and therefore not patentable. The Hatch-Waxman Act provides a five-year exclusivity period to incentivize the development of new chemical entities and it provides a three-year exclusivity period for new clinical investigations of small-molecule drugs. In other instances, Congress has implemented an exclusivity period when market-based pricing has not provided sufficient incentive to develop drug products for children or small patient populations. Central to each of these exclusivities is a public policy trade-off: a restriction oncompetition is provided in return for the development of a new drug product or new use of an existing product.

A 12- to 14-year exclusivity period departs sharply from this basic trade-off, because it does not spur the creation of a new biologic drug or indication. The drug has already been incentivized through patent protection and market-based pricing. The potential harm posed by such a period is that firms will direct scarce R&D dollars toward developing low-risk clinical and safety data for drug products with proven mechanisms of action rather than toward new inventions to address unmet medical needs. Thus, a new 12- to 14-year exclusivity period imperils the efficiency benefits of a FOB approval process in the firstplace, and it risks over-investment in well-tilled areas.

Basically what the FTC is saying that the longer timeframe of 12 years’ exclusivity for PhRMA actually discourages innovation and investment in new biologics. It allows PhRMA to sit there and recoup their investment on drugs like Herceptin. In the July 14th hearing before the Energy and Commerce Committee, Larry McNeely, the Health Care Advocate for U.S. PIRG, stated the reasons for the opposition to the Eshoo amendment and uses Herceptin as an example of which PhRMA continues to profit off rather handsomely in the five-year period of its exclusivity:

On average it costs $1.2 billion to take a biologic drug to market, and companies like Genentech should be rewarded for that investment. Genentech should profit from bringing a product to market that saves lives. In fact, they have recouped their development costs and much more, earning $5.5 billion from 2003-2008 alone.

But there’s a catch. Herceptin’s patent protections, the legal mechanism that protects intellectual property in most industries, expired in 2005. The available evidence, namely Genentech’s enormous annual profits, suggests that the patents on the drug provided an ample incentive for the important research that Genentech did on this drug.

Yet today, without a pathway for follow-on biologics, Genentech continues to enjoy monopoly pricing power. They have certainly made the most of it, charging $48,000 a year wholesale for the Herceptin treatment. Some reports have indicated that some consumers paying twice that amount or more. But under current law, it’s unlikely that a generic company will introduce a cheaper version of the drug anytime soon, and Genentech recognizes that. And Larry McNeely mentions the FTC report below:

Interestingly, the FTC concluded that in some ways biologics patents are stronger than patents on chemical drugs. It stated that “pioneer biologic drugs are covered by more and varied patents than small-molecule branded products, including manufacturing and technology platform patents.” (p. 26) Thus the FTC stated that “there is no evidence that patents claiming a biologic drug product have been designed around more frequently than those claiming small-molecule products.” (p. 26; see p. 36) In summary, the FTC found
that the pioneer biologic drug manufacturer can continue to earn significant revenues many years after FOB entry. (p. 26).

The FTC’s conclusions are important because chemical treatments have flourished without the 12 or 14 years of exclusivity that the biologics manufacturers are demanding. Under the Hatch-Waxman legislation, enacted 25 years ago, chemical drug manufacturers are entitled to only 5 years of exclusivity. Because patents almost always run longer than 5 years, the purpose and effect of this exclusivity is to provide market protection for the unusual products for which patents have expired or which have less than 5 years of patent protection remaining. For most chemical drugs, it is the patent system which provides the basic intellectual property protection.

The basic compromise that led to the enactment of Hatch-Waxman was not the 5 years of exclusivity. Instead the brand companies demanded and received patent extensions to compensate patent time lost as a result of the FDA drug approval process, which includes both the time needed to test the drugs and the time the FDA takes to approve products. Under Hatch-Waxman, companies are eligible for a patent extension of up to 5 years as long as the extension does not extend patents to more than 14 years. Importantly, these patent extensions already apply to biologics. Thus, even though Hatch-Waxman did not establish a generic program for biologics, it did give biologic innovators the same patent extensions that it gave to the chemical brands.

But there is a serious danger to conferring too much intellectual property protection. In the case of a drug like Herceptin, every year the drug’s manufacturer benefits from the high monopoly prices conferred by exclusivity will cost patients both in dollars, and in lives. Herceptin’s high monopoly prices make it less likely and more expensive for insurers to cover it. And thus, fewer patients with breast cancer have access to this life-saving medicine.

It is also significant that every year that Herceptin is enjoying monopoly profits is one more year that Genentech has no overriding incentive to develop additional products. Instead Genentech’s principal incentive is to preserve the market for its most profitable drugs, including Herceptin.

The Time Magazine, which recently did an article about how PhRMA won with its amendment sponsored by Rep. Eshoo, delves into the debate over the Eshoo amendment:

While only 20% of drugs on the market today are biologics, it is expected that, with 633 biotechnology medicines in development last year for more than 100 diseases, half the new drugs approved in 2015 will be. Biologics average more than 20 times the cost of traditional drugs: treating breast cancer with a year’s worth of the biologic Herceptin can cost $48,000; Remicade, for rheumatoid arthritis, can cost $20,000 annually. For other, rarer diseases, the price of biologic treatments can be as high as $200,000 a year.

As policymakers look for ways to control health-care costs, the price of biologics is drawing more and more scrutiny. The obvious model for bringing in competition is a 1984 law that Waxman wrote with Republican Senator Orrin Hatch. It lowered the regulatory obstacles that prevented generic drugs from making their way to market. At the time, it was expected that fast-tracking the approval of “bioequivalent” drugs would bring down medical costs by $1 billion a year. But with generics now accounting for more than 70% of prescriptions dispensed in the U.S., “the actual savings have exceeded our wildest expectations,” Waxman said in a Sept. 18 speech before the Generic Pharmaceutical Association. “In the last decade alone, generic drugs have saved consumers, businesses and state and federal governments $734 billion.”

Can a similar approach work with biotechnology drugs, which were not dealt with in the 1984 law because the industry was then in its infancy? A 2008 analysis by former Clinton Administration official Robert Shapiro, who has consulted for both biologics companies and their would-be generic competitors, suggested that generic versions of the top 12 categories of biologics whose patents have expired or will expire soon could save Americans up to $108 billion in the first 10 years and as much as $378 billion over two decades. “It’s the low-hanging fruit,” says Mark Merritt, head of the Pharmaceutical Care Management Association, the trade organization for prescription-drug-benefit managers. “If you can’t get this right on cost control, what can you get right?”

By allowing generic biologics into the market, we’d be able to save up to $108 billion in the first ten years and as much as $378 billion over two decades. The longer that PhRMA has exclusivity to its biologics, it means less savings realized for patients suffering from cancer, AIDs, and other diseases. They wouldn’t be able to get access to generic biologics for twelve years. They would have been able to get access within the shorter time frame proposed by Rep. Waxman who wanted to bring it down to five years of exclusivity:

Waxman had pushed to shield biologics for no more than five years — the same amount of time that traditional pharmaceuticals get under the Hatch-Waxman law. President Obama proposed seven years as a compromise.

So then why 12 years instead when the FTC says that it would in fact stifle innovation and encourage PhRMA to sit on their biologics and continue to reap billions of dollars over that timeframe? Why not shorten it to five years as Rep. Waxman had wanted?

The document by PhRMA states that the development costs for biologics are about 1.2 billion dollars per biologic drug, and that the time it takes to come to market is about 97 months, which is about eight years given the time frame for the market development for a traditional drug is about 90 months, and the development costs for traditional drugs are about $1.3 billion dollars. The traditional drugs have the five years’ worth of exclusivity granted to it under Waxman-Hatch. Then generics are able to come onto the market for these traditional brand-name drugs. Rep. Henry Waxman had urged that the same timeframe for data exclusivity be given to biologics under his bill, H.R. 1427, as did his counterparts in the Senate, Senators Schumer and Brown with their Senate bill, S. 726.

And now for the “ever-greening” that Rep. Eshoo says doesn’t exist in her legislationl:

“There is no ‘evergreening’ clause in my legislation. There is in fact an ‘anti-evergreening’ clause which explicitly provides no new exclusivity period would be granted for “a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength.” My amendment prohibits by its plain language exactly what Ms. Hamsher alleges it would encourage.”

However, this brings up the issue of “ever-greening” in her amendment. What “ever-greening” is that it allows for brand companies to make relatively simple and inexpensive tweaks to the older biologics, and obtain a new 12-year protection period for the modified product. And she claims that the language in her amendment below does not allow for the loop-hole of “ever-greening”:

Section 7(C): Products not eligible for 12 years exclusivity and filing moratorium.

“7(A) and (B) shall not apply to a license for or approval of-

i. a supplement for the biological product that is the reference product; or

ii. a subsequent application filed by the same sponsor or manufacturer of the biological product that is the reference product) or a licensor, predecessor in interest, or other related entity) for

(I) a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength; or

(II) a modification to the structure of the biological product that does not result in a change in safety, purity or potency.”

Translation: Subsequent applications filed by the same sponsor or manufacturer are eligible for 12 years market exclusivity and filing moratorium for products that have a structural modification that results in either:

The existence of the language in the bracket “(not including a modification to the structure of the biological product)”—is what’s referred to as the loophole for “ever-greening”. Basically, if you look at the language itself as Sara Rimmington has said below, “you’ll see that changes to biologics that result in a new indication, routes, dosing schedules, delivery systems, and so on, are ineligible for another 12- year exclusivity period under the Eshoo approach only if they come about without a modification to the structure of the product.” So, “if the biologic company decides to make a change to the structure of the already approved biologic that results in a new indication or any of the other items listed, they will be eligible for a brand new 12-year exclusivity period,” according to Sara Rimmington, an attorney in patents and litigation, at the Access To Essential Medicines Project.

The reasons floated by Rep. Eshoo for the 12 years’ exclusivity don’t hold water when held up to the arguments against it from the Federal Trade Commission and coalition groups like Affordable Medicines Now, a coalition of four organizations such as the American Medical Student Association which was started in 1950 and has more than 62,000 members, including medical and premedical students, residents and practicing physicians, the Universities Allied For Essential Medicines (UAEM), which is made up of students and researchers from over 50 universities across the globe that deal with university licensing and patenting in their promoting access to medicine for underdeveloped populations, the Essential Action | Access To Medicines Project, which is a non-partisan, non-industry funded public health and corporate accountability group based in Washington, DC, and the Knowledge Ecology International, a not for profit, non-governmental organization that searches for better outcomes, including new solutions, to the management of knowledge resources. The Affordable Medicines Now has a rebuttal to the Eshoo amendment that you can find at this link here.

It’s not just the Affordable Medicines Now coalition that is opposed to the Eshoo amendment, these following groups below are also opposed to the Eshoo amendment as you can see here and here and in here and here:

AARP
American Federation of State, County and Municipal Employees, AFL-CIO (AFSCME)
The American Medical Student Association (AMSA)
Breast Cancer Action
California Public Employees’ Retirement System (CalPERS)
Consumers Union
Center for Policy Analysis on Trade and Health (CPATH)
Department for Professional Employees, AFL-CIO
Essential Action
Health GAP (Global Access Project)
International Union, United Automobile, Aerospace & Agricultural Implement Workers of America (UAW)
Knowledge Ecology International (KEI)
Latinos for National Health Insurance
National Multiple Sclerosis Society
National Organization for Rare Disorders (NORD)
National Physicians Alliance
National Research Center for Women and Families
National Women’s Health Network
Northwest Federation of Community Organizations
OWL – The Voice of Midlife and Older Women
Public Citizen
Salud y Farmacos
Service Employees International Union (SEIU)
Universities Allied for Essential Medicines (UAEM)
U.S. PIRG (Public Interest Research Group)

And this is what Rep. Waxman had to say about Rep. Eshoo’s amendment during the committee mark-up of the health care bill:

I know that members of this committee support creation of a biosimilar pathway. I know they believe it will bring competition and reduce the high price of biologics. I endorse that, but I strongly believe that adoption of this amendment exactly the wrong way to achieve increased competition and lower prices nor will it enhance innovation.

This amendment enacts a lengthy monopoly period — twelve years — and then allows those periods to be extended indefinitely, the so-called “evergreening problem.”

The evidence is overwhelming that these open-ended monopolies will create huge obstacles to competition. To those who want competition in the biologics market, I refer people to a letter from the CEOs of the 28 major generic drug companies. They say, monopolies with this long an unpredictable period of time — that they will not even enter the biosimilar market because there is no economic incentive for them to do it.

To those who want lower cost, look to what the payers are saying and the patients group, a coalition of consumer groups AARP, unions, businesses and state and private payers strongly oppose this amendment because it will rob us of the opportunity to achieve significant cost savings for patients and payers. To those who think this is going to bring innovation look at the report from the federal trade commission which conducted a year-long investigation and concluded that monopolies this long would severely damage both competition and innovation, creating real competition in the drug marketplace is one of the best opportunities we have to control costs.

But by passing this amendment, we’re not only missing a historic opportunity to bend the cost curve. We’re guaranteeing higher drug costs for the foreseeable future.

I understand a large majority of this committee supports this amendment. I do not.

Also, Sherrod Brown is looking to bring up his amendment which reduces the number of years of data exclusivity for PhRMA from 12 to 7 years, which is what the compromise position of the WH initially was, and he wants to know if he’ll get support on his amendment, so please call his office and ask him to bring his amendment to the Senate floor.

CALL Senator Brown at (202) 224-2315!

And please sign our petition to Senator Brown to get his amendment against biologics onto the Senate floor today!

We’ll keep on fighting for what is right, and please help support our work withPOP, which is a non-profit that engages in health care advocacy. Our efforts will continue long after this health care bill is passed. Please consider making a monthly donation to support our ongoing advocacy for health care as a human right. You can become a fan of POP on Facebook as well. You also can follow me on Twitter @slinkerwink.

Update: There’s a prior diary on this issue that links to the Rep. Eshoo editorial if you want to see it.

As a three-time breast cancer survivor, I have a strong personal stake in health care reform. So when students from the American Medical Students Association wrote us at PublicOptionPlease.com and told me about their campaign to keep biologic “drugs of the future” available and affordable, I was eager to help.

Incredible developments have been made in recent years with these “high tech” drugs made from living cells, which now represent 25% of all new drugs and 50% of all important drugs approved. But I know from personal experience that they can be prohibitively expensive, even for people like me who are fully insured. Senator Sherrod Brown has been a powerful advocate for making sure that one day they will be available in generic form:

All too often, the pricetag for this type of drug is simply too high for the patient who needs it. For instance, annual treatment for breast cancer with the brandname biologic drug Herceptin costs $48,000. Even if you are lucky enough to have health insurance and you are paying 20 percent copay, that is $9,600 a year. More than 192,000 American women will be diagnosed with breast cancer in 2009. How are they going to afford that kind of drug?

Senator Brown and Congressman Henry Waxman proposed legislation that would make these drugs available in generic form after giving companies a 5 year monopoly to recoup their costs. Sadly, they lost out to legislation offered by Rep. Anna Eshoo in the House and Senator Kay Hagen in the Senate, which was much more generous to pharmaceutical companies at the expense of those who badly need these drugs.

——I wrote about what this means to many breast cancer survivors like me:

[T]hanks to Representatives Anna Eshoo and Joe Barton, there will be no generic versions of [biologic] drugs. At least not for 12 years, if the House health care bill announced today passes. And because of an “evergreening” clause that grants drug companies a continued monopoly if they make slight changes to the drug (like creating a once-a-day dose where the original product was three times per day), they will never become generics.

Representative Eshoo responded in both the Hill and the Huffington Post, saying she was “quite frankly outraged by the falsehoods and misrepresentations in Ms. Hamsher’s column.” She resoundingly refutes the claim about “evergreening”:

There is no ‘evergreening’ clause in my legislation. There is in fact an ‘anti-evergreening’ clause which explicitly provides no new exclusivity period would be granted for “a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength.” My amendment prohibits by its plain language exactly what Ms. Hamsher alleges it would encourage.

I can’t tell you how happy I am to hear that Rep. Eshoo did not intend to put an evergreening period in her bill. Because not only would it apply to important breast cancer drugs, but also to drugs yet to be developed for everything from Alzheimers to an AIDS vaccine. Thank you, Rep. Eshoo, for your commitment to having a bill that does not allow for “evergreening.”

Now the question becomes — how are we going to get one?

Because I went back and read the bill again. And I double checked with a number of experts including Ethan Guillen, Executive Director of Universities Allied for Essential Medicines (UAEM), Chris Manz, UAEM student at Duke University, and Sarah Rimmington, Attorney at Essential Action., Access to Medicines Project. They’ve been working on this bill a long time too, and they all concur that Rep. Eshoo’s bill doesn’t say what she believes it does.

They wrote a response to her impassioned post today:

The clause Representative Eshoo refers to does appear on its face to exclude changes that result in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength from being eligible for a new 12-year exclusivity period. Unfortunately, her understanding of how the language operates is incorrect. The existence of the language in the bracket “(not including a modification to the structure of the biological product)”–actually does create a huge evergreening loophole. If you look closely at the tricky language of the sentence you will see that changes to biologics that result in new indications, routes, dosing schedules, delivery systems, strengths, etc., are ineligible for another 12- year exclusivity period under the Eshoo approach only if they come about without a modification to the structure of the product.

In other words, if a company makes a modification to the structure of the already approved biologic that results in a new indication or any of the other items listed, they will be eligible for a brand new 12-year exclusivity period. Unfortunately, because the term “structural modifications” is not defined, interpretation is open to a very wide range of possible changes that will qualify for a brand new 12-year monopoly, many of which are relatively simple and inexpensive to do, and which do not change a drug in any material way.

Henry Waxman concurs with them. Here’s what he had to say about Rep. Eshoo’s amendment during markup:

I strongly believe that adoption of this amendment exactly the wrong way to achieve increased competition and lower prices nor will it enhance innovation.

This amendment enacts a lengthy monopoly period — twelve years — and then allows those periods to be extended indefinitely, the so-called “evergreening problem.”

Rep. Eshoo didn’t respond to Rep. Waxman’s statement at the markup, but I’m sure she’ll appreciate having the Chairman of the Energy and Commerce Committee to back her up when she tells Speaker Pelosi that she needs to re-write her language before H.R. 3200 passes the House in order to achieve her objective.

Rep. Eshoo is also relying on some questionable data for other conclusions she reaches. For instance, she wants a 12-year data exclusivity period on biologic drugs, “which is the same amount of time that all drugs enjoy on the market under patent protection.”

I’m sure she’s not trying to be intentionally misleading, but conventional drugs get 5 years of “data exclusivity.” That’s not the same thing, as she takes pains to explain earlier in her post, as “patent protection.”

She says drug companies spend billions of dollars to bring biologics to market, and that it’s “necessary to allow some period of time to recoup the investment in developing the drug.”

But according to PhRMA’s own research, the average development cost for biologics is $1.2 billion, which is less than the $1.318 for conventional drugs (PDF).

In fact, earlier this year the FTC released a study which said biologics needed zero years of exclusivity to recoup their investment, and that the 12 years Rep. Eshoo proposes would stifle innovation and competition and keep drug prices high. They agreed with Congressman Waxman that Rep. Eshoo’s amendment would encourage firms to change formulas slightly and retain endless monopolies, rather than seek “new inventions to address unmet medical needs.”

In response to the FTC report, President Obama took a “split the baby” approach and advocated that a generous 7-year monopoly be granted to the drug companies. But an aide to Rep. Eshoo dismissed the FTC report entirely, saying “she doesn’t really count on the FTC as really being an expert on issues related to drugs and biotechnology.”

Rep. Eshoo boasted at the markup about the CBO estimated which said her amendment would save $9 billion over the next decade. What she doesn’t mention is that it replaced Rep. Waxman’s language in the bill, which never got a CBO score. But an independent study (PDF) indicates that savings from generic biologics would be $71 billion over ten years, which supports Rep. Waxman’s claims that Rep. Eshoo’s bill will inhibit competition and affordability rather than encourage it.

Her cosponsor, Rep. Jay Inslee, also expressed gratitude at the markup to private investors for investing $1 billion to bring the biologic blockbuster biologic drug Embrel (entanercept) to the market. He should have also thanked the taxpayers. An analysis by Knowledge Ecology International shows that it is doubtful that Amgen spend more than $400 million on clinical development of the drug before approval, and that more than half of the early Phase I and II clinical trials on this drug were funded by the government through NIH or by universities.

Does he think the public deserves anything for their investment too?

The pharmaceutical industry, which has donated over $712,000 to Rep. Eshoo, may be less than happy to learn that she is committed to eradicating evergreening language from her legislation. But as the young medical students who recently protested in front of her office told her staff, access to these lifesaving drugs for their patients is far more important than protecting pharmaceutical monopolies.

Robert Weismann, the President of Public Citizen, says that when Rep. Eshoo is rewriting her language, she should look to Rep. Waxman’s bill, which “shows what you’d do if you were trying to avoid evergreening.”

I look forward to Rep. Eshoo’s swift action to change the language in the health care bill before it is passed and drug companies start asserting protections she stridently says she doesn’t want to grant them. And I urge my fellow cancer patients everywhere to reach out to Senators Brown, Schumer, Collins, Stabinow and Vitter and encourage them to do likewise by bringing their much more moderate and fiscally responsible amendment on biologics to the floor of the Senate.

On n November 1, 2009 Essential Action and some of its partners in the AffordableMedsNow.org campaign released a memo responding to a October 30 op-ed by Representative Anna Eshoo which appeared in The Hill and on The Huffington Post.

You can read the memo on progressive blog FireDogLake.com, or in the continuation of this post.

Below are some of the key assertions made by Rep. Eshoo in her recent blog post, followed by our responses to them.

Eshoo: Biotechnology products cost billions of dollars to develop, test and bring to market, and in order to ensure that competitors aren’t immediately allowed to free-ride on the costly safety and efficacy data produced by innovators, some period of ‘data exclusivity’ is necessary to allow some period of time to recoup the investment in developing the drug.

The House and Senate health care bills include a data exclusivity period of 12 years, which is the same amount of time that all drugs enjoy on the market under patent protection, which prevents any competition. I believe the 12-year data exclusivity period preserves the existing incentives for investment in these life-saving products.”

And

Without such a ‘data exclusivity’ period, there would be no reason to invest in new biologics. We would see the flow of research funds going to traditional pharmaceuticals, medical devices, semiconductors, green technology or other more promising innovations.

Response: The brand-name pharmaceutical industry’s own numbers show that research and development costs for biologics and conventional drugs are comparable, and that about the same amount of time is required. Eshoo’s approach would grant 12-years of market exclusivity to brand-name biologics — an extra 7 years of monopoly protection — more than double the five years conventional drugs receive. Moreover, the evergreening loopholes in the Eshoo-Barton approach adopted in the House health committee (which is identical to the Senate health committee’s adopted approach championed by Sens. Hatch, Enzi and Hagan) could make monopoly protection for many products indefinite. This approach doesn’t make sense given the numbers.

Sources for the above:

In its own document, PhRMA (the brand-name pharmaceutical industry’s association) notes that the development costs for biologics ($1.2 billion) are actually less than for conventional drugs ($1.318 billion). See: http://www.phrma.org/files/PhRMA%202009%20Profile%20FINAL.pdf

Similarly, three studies authored or co-authored by Tufts University economist Henry Grabowski note little difference in development costs and approval times (97.7 months and $1.2 Billion for biologics vs. 90.3 months and $1.3 billion for traditional drugs). One of these studies can be found at: http://www.aei.org/docLib/20070607_GrabowskiWorkingPaper.pdf

Prof. Grabowski’s findings are notable because his work is also frequently funded by the brand-name industry. See the following recent article from Time Magazine, which mentions Prof. Grabowski’s industry ties. More importantly, this article discusses how the pharmaceutical industry lobbyists got their way on health care using the Eshoo-Hatch biogenerics proposal as an example: http://www.time.com/time/politics/article/0,8599,1931595-2,00.html

There are many experts who are concerned about the 12 years of data exclusivity offered to branded biologic drugs by the Eshoo approach.

For example, a June 2009 study by the independent Federal Trade Commission concluded that biologics would be well protected from generic competition even in the absence of data exclusivity. They recommended these products be given zero years of data exclusivity and indicated that giving biologics any period of exclusivity – but particularly the 12 years that the brand-name industry seeks and that Rep. Eshoo’s approach gives them – would in fact likely stifle innovation. This amount of exclusivity, in the FTC’s view, would merely encourage firms to tinker with what they have rather than drive them toward “new inventions to address unmet medical needs.” This is contrary to Rep. Eshoo’s comment that 12 years of market exclusivity is absolutely necessary to ensure future biologic development.

An October 2009 article in the New England Journal of Medicine argues that biogenerics approach adopted by the Senate and House committees this summer puts so many barriers to generic biologics that the pathway will seldom be used. http://content.nejm.org/cgi/content/full/NEJMp0908496v1

Also note that Patricia Danzon, a Wharton professor who regularly consults for pharmaceutical companies, argues that giving biologics more data exclusivity than conventional drugs could have the undesirable effect of promoting biologic research at the expense of investment into developing more traditional drugs. “Having five years of exclusivity for chefdamical drugs and 12 years for … biologics would be very different. We may be creating a situation where the return on investment is lower for developing chemical drugs compared to biologics and that would be a big mistake.” (http://www.kaiserhealthnews.org/Checking-In-With/Biologics.aspx).

For all of these reasons and more, we believe that data exclusivity for biologics should not exceed the five (5) years proposed by Rep Waxman (HR 1427) and Sens Schumer, Brown, Collins, Vitter et al (S. 726), which is the same amount of protection that conventional drugs receive.
Eshoo: It’s important to note that today there is absolutely no restriction on data exclusivity — it’s effectively infinite. Competitors are never permitted to use the data produced by a brand-name biologic manufacturer. The Kennedy-Eshoo legislation brings this exclusivity down from forever to 12 years, in essence laying the groundwork for the creation of the biosimilar industry, new competition for the biotechnology industry, and reduced prices for patients.

Response: It is true that there is currently no pathway to make generic biologics. However, we need a pathway that will work, not one that will introduce so many barriers that the pathway will seldom be used.

“…thanks to Representatives Anna Eshoo and Joe Barton, there will be no generic versions of these drugs. At least not for 12 years…”

The 12-year data exclusivity period in the Kennedy-Eshoo legislation begins from the time of FDA approval. Since the vast majority of the most popular biologics treatments were approved at least 12 years ago, this means that they would have virtually no data exclusivity protection. The important cancer and anemia treatments that millions of patients rely on will be subject to biosimilar competition as quickly as the FDA can process the follow-on manufacturers’ applications. (For example, under my amendment Herceptin’s data exclusivity period will expire in September 2010.)

Response: It is true that for older biologics there is the potential for biosimilars to start coming on the market shortly after an FDA approval pathway is adopted. However, under Rep. Eshoo’s proposal it will be possible for brand companies to make relatively simple and inexpensive tweaks to the older biologics, and obtain a new 12-year protection period for the modified product. Then, based on the experience with conventional drugs, there is very strong reason to believe that brand-name companies will be able to exert their marketing acumen to transition patients (and doctors) to the modified product, and away from cheaper, generic versions of the old product. Indeed, it is quite likely that in many or most cases this prospect will deter generic manufacturers from entering the biogenerics market at all. This practice is called evergreening.

A classic example of how the evergreening process works involves the acid-reflux drugs Prilosec and Nexium. With its best-selling Prilosec facing generic competition, AstraZeneca introduced Nexium, a slight chemical variant of Prilosec. AstraZeneca studies showed the new drug to have the slightest improved performance from Prilosec, not for heartburn, but for “erosive esophagitis,” where burped-up stomach acid injures the esophagus. That slightly improved result enabled the company to launch a full-court press to get consumers to switch from the drug going off patent to the one just coming on. Nexium sells for about 5 times the price of Prilosec. Annual revenues for Nexium, on a global basis, top $5 billion.[1]

Troublingly, under Eshoo-Barton and Senate health committee approaches, evergreening will be easier and more effective for biologics than it is for conventional drugs.

First, in many or most cases, generic versions of biologics will not be identical with the brand-name product. In these cases, the generic product will be treated as “biosimilar” and not “interchangeable,” and will only be available to a patient upon specific prescription by a doctor. There will thus be a built-in bias in the system against switching to generic products — and make it easier for the brand-name company to direct patients to their modified, monopoly-protected products.

Secondly, conventional drug evergreening involves efforts to obtain new patent protection. Patent protection is much less robust than data exclusivity; this is especially true for patents on modifications to products. Generic firms are commonly able to challenge successfully or work around modification patents. By contrast, while the bar for attaining data exclusivity is lower than obtaining patent protection (which requires a new, useful and non-obvious invention), the data monopoly is absolute: it is granted automatically upon FDA marketing approval and is not subject to workarounds.

Moreover, with biologics expected to make up half of all the newly approved drugs in just a few years, we have to be concerned about accessibility to newer and better treatments that will continue to come on the market. Rep. Eshoo’s proposal will give these as yet undeveloped products an unjustified 12-year marketing monopoly, and, more troublingly, the evergreening loophole will also be available to them.

This means that the Eshoo-Barton and Senate health committee approaches will offer only the illusion of urgently needed price-lowering generic competition for biologics. These approaches will torpedo the objective of healthcare cost containment so crucial to current healthcare reform efforts, and severely limit patient access to these important and exceptionally high-priced medicines for conditions like cancer, arthritis and diabetes.

This means Medicare and other federal programs will find their budgets increasingly strained by growing biologic drug costs. Employers will continue to struggle to provide affordable health insurance to their employees. Americans with insurance will find it even more difficult to pay for their already sky-high prescription drug co-payments. And the uninsured may have to go without crucial lifesaving biologics.

Eshoo: “And because of an ‘evergreening’ clause that grants drug companies a continued monopoly if they make slight changes to the drug (like creating a once-a-day dose where the original product was three times per day), they will never become generics.”

“There is no ‘evergreening’ clause in my legislation. There is in fact an ‘anti-evergreening’ clause which explicitly provides no new exclusivity period would be granted for “a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength.” My amendment prohibits by its plain language exactly what Ms. Hamsher alleges it would encourage.”

Response: The short answer is that the language highlighted by Rep. Eshoo does exactly the opposite of what she says it does: it preserves an evergreening option so long as there is a structural modification made to the biologic, which in the bill is an easy standard to meet. By contrast, Rep. Waxman and Sen. Schumer’s bills show what you’d do if you were trying to avoid evergreening.

The longer rebuttal follows: The clause Representative Eshoo refers to does appear on its face to exclude changes that result in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength from being eligible for a new 12-year exclusivity period. Unfortunately, her understanding of how the language operates is incorrect. The existence of the language in the bracket “(not including a modification to the structure of the biological product)”—actually does create a huge evergreening loophole. If you look closely at the tricky language of the sentence you will see that changes to biologics that result in new indications, routes, dosing schedules, delivery systems, strengths, etc., are ineligible for another 12- year exclusivity period under the Eshoo approach only if they come about without a modification to the structure of the product.

In other words, if a company makes a modification to the structure of the already approved biologic that results in a new indication or any of the other items listed, they will be eligible for a brand new 12-year exclusivity period. Unfortunately, because the term “structural modifications” is not defined, interpretation is open to a very wide range of possible changes that will qualify for a brand new 12-year monopoly, many of which are relatively simple and inexpensive to do, and which do not change a drug in any material way.

Of course, these modifications may offer small or significant patient benefits. But because they are typically easy and inexpensive to design, brand-name firms do not need the lure of protracted monopolies to make these minor modifications.

A key example of the types of modifications that would qualify for a new 12-year monopoly under the Eshoo approach is a process called PEGylaton, which will result in increased safety or a new dosing schedule, route, form, or delivery system. PEGylating a protein is a relatively inexpensive and easily performed structural modification (compared to changing the underlying amino acid structure of the biologic).

Example: Oncaspar is a PEGylated from of L-asparaginase used for the treatment of acute lymphoblastic leukemia. It is used in patients who are hypersensitive to the un-PEGylated form of L-aparaginase. The PEGylated product Oncaspar is now is being encouraged by the company for first line use instead of the older, un-PEGylated versions.[2]

It should also be noted that the Eshoo language does not require a change to the amino acid structure of the biologic — the scientific definition of a truly new medicine — in order to allow a brand product to obtain a new 12-year monopoly.

For your convenience, I have reproduced below the language of the relevant provision from the Eshoo-Barton-Inslee Biologics Amendment adopted by the House Energy & Commerce Committee in their healthcare reform bill in July 2009 in its entirety. (Note that this amendment is identical to that which was adopted by the Senate Health Education Labor and Pensions committee as part of its healthcare reform bill in July 2009)

Section 7(C): Products not eligible for 12 years exclusivity and filing moratorium.

“7(A) and (B) shall not apply to a license for or approval of-

i. a supplement for the biological product that is the reference product; or

ii. a subsequent application filed by the same sponsor or manufacturer of the biological product that is the reference product) or a licensor, predecessor in interest, or other related entity) for

(I) a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device, or strength; or

(II) a modification to the structure of the biological product that does not result in a change in safety, purity or potency.”

Translation: Subsequent applications filed by the same sponsor or manufacturer are eligible for 12 years market exclusivity and filing moratorium for products that have a structural modification that results in either:

Only if the changes that result in the items listed in point I or II are not accompanied by a change to the structural modification are they ineligible for the 12-year exclusivity period. As explained above, it will be very easy for brand companies to make simple and inexpensive structural modifications to many biologics that result in new dosage forms, strength, etc. Thus Eshoo’s understanding of her own amendment’s language is incorrect.

Eshoo: I’m proud to have this legislation endorsed by: The AIDS Institute, ALS Association, Alliance for Aging Research, American Autoimmune Related Diseases Association, Association of American Universities, Candlelighters Childhood Cancer Foundation, former Vermont Governor Howard Dean, M.D., Immune Deficiency Foundation, the National Alliance on Mental Illness and many other patient advocacy groups.
Response: The vast majority of non-industry affiliated consumer, health and patient groups who have weighed in on this issue, plus a huge number of businesses, HMO’s and unions support the approach of Representatives Waxman and Deal and Senators Schumer, Brown, Collins et al, and oppose the approach of Representatives Eshoo, Barton and Inslee and Senators Hatch, Enzi and Hagan. A long list of consumer, health, patient and industry groups supporting the Waxman-Schumer approach and concerned about the Eshoo-Barton and Enzi-Hatch-Hagan approach (along with links to a few specific pieces of correspondence and key WebPages) can be found below. This list may be incomplete.

It also is worth noting that Eshoo-Hatch approach supporter Dr. Howard Dean has recently worked for BIO (the Biotechnology Industry Association), that the universities represented by the Association of American Universities stand to reap larger royalty payments from the patents they hold on biologic medicines for longer monopoly periods, and that the National Alliance on Mental Illness receives three-quarters of its operating budget from brand-name drug makers, according to a recent New York Times article, available at http://www.nytimes.com/2009/10/22/health/22nami.html?_r=2&scp=1&sq=advocacy%20group&st=cse

If you do some research, you will likely find that many if not all of the patient groups that back Rep. Eshoo’s approach have significant ties to the brand-name industry, as this is a common practice of Pharma to fund patient and health groups. Very few (probably only two, but possibly a couple more) of the consumer, health and patient groups that oppose Eshoo’s approach take money from the either the brand-name or the generic biopharmaceutical industry. You could search the database created by Essential Action at http://www.pharmafiles.net/ to see if any of the other patient and health groups Rep. Eshoo (or this memo) mentions as supporters have industry connections. FYI, the absence of a mention doesn’t mean that the groups don’t have industry ties: the database is a work in progress and there are literally thousands of pharma-funded patient and health groups.

For more information about Howard Dean, his views on biogenerics, and his relationship with the brand-name biologics industry, see the fabulous blog posts by James Love on Huffington post this past July:

Mr. Love also blogged about how Dr. Dean’s former campaign manager Joe Trippi wrote a piece on biogenerics on HuffPo while not disclosing he had been paid by industry to work on the issue: Joe Trippi Admits He Works for BIO, While He Plugs BIO Bill in HuffPo http://www.huffingtonpost.com/james-love/joe-trippi-admits-he-work_b_238289.htmlv

Teva Pharmaceutical Industries’ biogenerics websites, which have links to some gripping stories about patients struggling with the high costs of brand-name biologic drugs: http://www.fivevstwelve.com/index.html and http://www.yearofaffordablehealth.com/
[1] For more on the Prilosec and Nexium case, see, for example, Alex Berenson, “Where has all the Prilosec Gone?” The New York Times, March 2, 2005, at www.nytimes.com/2005/03/02/business/02prilosec.html and Maryann Napoli, “The Latest Heartburn Drug Dressed in Purple, But Just Another Knock-off,” BNET Healthfacts, September 2001, at http://findarticles.com/p/articles/mi_m0815/is_2001_Sept/ai_77823684/.

On October 26, 2009 Ecuador’s President Rafael Correa declared access to priority medicines affecting the health of the Ecuadorean population to be a matter of public interest. Under Andean Community law, the declaration opens the door to competition of generic medicines with patented brand-name drugs, through use of an internationally recognized legal mechanism called compulsory licensing. The declaration could lead to government policies that expand access to medicines.

On October 26, 2009 Ecuador’s President Rafael Correa declared access to priority medicines affecting the health of the Ecuadorean population to be a matter of public interest.[1] Under Andean Community law, the declaration opens the door to competition of generic medicines with patented brand-name drugs, through use of an internationally recognized legal mechanism called compulsory licensing. The declaration could lead to government policies that expand access to medicines.

Globally, competition has consistently proven the most effective method to reduce medicine prices, and ensure prices continue to fall over time. Over the last ten years, generic competition has produced a revolution in HIV/AIDS treatment, reducing prices for first-line antiretrovirals from around $10,000 to around $100 per year, and enabling over four million people worldwide to access treatment.

By issuing a compulsory license, a government can authorize competition with patented products, including the importation, domestic production, distribution and/or sale of generic medicines. In exchange, licensees pay reasonable royalties to the patent holder, set by the government according to the circumstances of each case. Compulsory licenses do not “eliminate” or “override” patents. Instead, they authorize the use of patented technology under enumerated conditions.[2]

Countries’ right to issue compulsory licenses “on grounds of their choosing” is enshrined in the World Trade Organization’s TRIPS Agreement (1995) and unanimous Doha Declaration (2001) on intellectual property and public health. The WTO’s Doha Declaration also states, “the [TRIPS] Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.”

Ecuador’s Presidential declaration does not on its own issue a compulsory license. Rather, it authorizes procedures by which the government can subsequently decide, case-by-case, to issue compulsory licenses for priority medicines (as determined by the Ministry of Public Health), based in public interests such as reducing treatment costs and enabling greater access to treatment. The declaration follows public pronouncements by President Correa articulating a vision of intellectual property as “a mechanism for development for the people,” and is an important step toward access to medicines for all.

Many countries have used compulsory licenses to promote public interests and remedy anti-competitive practices in a variety of sectors. Today, the United States is perhaps the most frequent user of compulsory licensing; including the government use of defense technologies, and judicially-issued licenses to remedy anti-competitive practices in information technology and biotechnology, among others. Canada routinely issued compulsory licenses during the 1960s and 70s to develop its national pharmaceutical industry. In recent years, a number of countries have issued compulsory licenses to improve access to medicines, including Thailand, Malaysia, Eritrea, Mozambique and Indonesia, among others.

In 2007, Brazil issued a compulsory license for the HIV/AIDS medicine efavirenz. Brazil has provided treatment to hundreds of thousands of people living with HIV/AIDS and saved well over US$1 billion through its combined medicines strategy of domestic production, importation, negotiation and compulsory licensing.

President Correa signed the declaration Friday October 23, but his office released it on the 26th. The declaration enables Ecuador’s government officials to consider introducing generic competition with some of the country’s expensive patented drugs, including second-line HIV/AIDS treatments that cost more than double the current competitive price, and lifesaving cancer treatments that exceed $35,000 per person, per year, and which some hospitals cannot afford. The UNAIDS 2008 report estimated 42% of Ecuadoreans needing antiretroviral therapy received it. Resource constraints in Ecuador limit availability of treatment.

Ecuador’s declaration cites Constitutional principles as well as provisions of the National Development Plan and international agreements, including the WTO TRIPS Agreement and the World Health Assembly Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property. The declaration charges the Intellectual Property Institute of Ecuador (IEPI) with establishing royalties and the terms of licenses, in compliance with all applicable national legislation and international rules. The Presidential declaration incorporates requirements of the WTO’s TRIPS Agreement and Andean Community legislation, including excerpting some passages word-for-word. IEPI has published an administrative guide to compulsory licensing for the use of Ecuador’s government agencies.

[1] The declaration is available online, in Spanish, at: http://www.sigob.gov.ec/decretos/.

[2] There are several common misunderstandings about the TRIPS Agreement’s provisions and compulsory licensing for medicines. Three of the most commonly perpetuated myths are that compulsory licenses “eliminate” or “override” patents, that they can only be issued in an emergency, or that negotiations with pharmaceutical companies are always required before issuing compulsory licenses. For more information on these and other common misunderstandings, please see the World Trade Organization document “TRIPS and Health: Frequently asked questions Compulsory licensing of pharmaceuticals and TRIPS,” available at http://www.wto.org/english/tratop_e/TRIPs_e/public_health_faq_e.htm